Countries of the World/COUNTRYS.BIN/dp/0163/01634.txt

Text File | 1991-06-25 | 13KB | 238 lines

$Unique_ID{COW01634}
$Pretitle{365}
$Title{Hungary
Introduction of convertibility}
$Subtitle{}
$Author{Embassy of Hungary, Washington DC}
$Affiliation{Embassy of Hungary, Washington DC}
$Subject{system
economic
government
housing
hungary
policy
external
social
country's
market}
$Date{1990}
$Log{}
Country:     Hungary
Book:        Foreign Policy Basics
Author:      Embassy of Hungary, Washington DC
Affiliation: Embassy of Hungary, Washington DC
Date:        1990

Introduction of convertibility

     The conditions necessary for making the forint convertible can be created
through a series of concerted steps over the coming years. Full
convertibility, of course, will necessarily take longer to achieve, as it will
require, for example, a concrete external and internal balance of the economy,
and confidence both at home and abroad in the Hungarian currency.

     Certain elements in the forint's convertibility can be realized in the
short run, as it is already possible for foreign capital to fully exchange its
profits earned in Hungary. Once import liberalization becomes complete, the
forint will become fully convertible for all Hungarian economic units.

     The government guarantees the right for the citizens to freely deposit
their hard currency savings into appointed Hungarian banking institutions.

External economic strategy: reducing the external and internal state debt

     The successful integration the Hungarian economy in the European and
world market will be an indicator of economic reform and prosperity.

     In renewing its external trade policy, the government will seek the
following goals:

     - Eastern European cooperation has been placed on new foundations, and
this is expected to create a coherent system of demands in these previously
isolated markets. It is also expected to introduce the values of the world
market to those who participate in Hungary's economy. These are the basic
conditions for Hungary to join, in the widest possible sense, the
international organization of production and labour.

     - Between 1991 and 1993, Hungary's external economic policy and economic
activity will be increasingly determined by the rules of the market.
Simultaneously with the gradual abolition of the existing restrictions (e.g.
the system of licensing), will proceed the liberalization of imports. This
period will see the emergence of market-based forms and institutions of
financing (e.g. the Investment Agency) to promote external economic activity.
Foreign trade will assume a new outlook, and we will witness the emergence of
competition and genuine interest relevant to successful work.

     - The targeted balance of international trade necessitates considerable
increases in Hungary's total volume of exports. In the forthcoming three-year
period this increase must exceed 20 per cent. Within this process, it will be
a real challenge to boost hard currency accounting exports by at least 30 per
cent between 1990 and 1993. This requires not only quantitative increases, but
also simultaneous improvements in the structure, quality, price, and
marketability of the goods Hungary sells abroad. Such a steep growth in
Hungary's hard currency accounting exports is indispensable for keeping the
country solvent, and for the restructuring of the economy as well. The radical
increases in external economic ties, and the widening of the scope of goods
that can compete on the external markets, require that the incentives commonly
accepted in the free market economies be introduced in Hungary as well.

     - In the coming years, special emphasis will be placed on strengthening
this country's ties with the industrialised countries, and on adapting
ourselves to the conditions of European integration. Through these links,
as well as through strengthening the ties with the major international
economic and financial bodies (e.g. International Monetary Fund), Hungary can
promote its own economic renewal.

     Hungary will not initiate the rescheduling of debt repayments. The
government's economic reform policy and the policy's results are expected to
convince creditors that it is worthwhile, and in their own interest, to
cooperate with Hungary. This policy will contribute to the preservation and
improvement of the country's solvency, and will also promote the creation of a
favourable climate for investments. Within the framework of ownership reform,
this policy will increase the chances of the State Assets Agency, and also
of the state companies and holdings, to materialize the intended investments
by both domestic and foreign investors. The sale of state property must
result in cuts in the country's external and internal debts.

     Part of the revenues from these sales can be used for enhancing the value
of the remaining assets, and for increasing the country's producing power and
economic efficiency. The increase of revenues and the promotion of growth
represent one of the basic aspects of, and are a condition for, the careful
management of the country's debts and assets.

Housing policy

     The lack of housing and the operation of the housing system are among the
country's most acute economic problems. The introduction of a gradual, but at
the same time radical, reform in the housing system can tolerate no delay
either from an economic or from a social point of view. The success of the
changes, and also of the drive to stop the abuses, hinges on the wide support
of society. To achieve this, there is need for the vast majority of the
population to realize that the new system does not only reduce the budget's
housing burdens (thus increasing the population's housing expenses), but at
the same time produces qualitative and quantitative changes in the housing
situation, making it easier for the tenants to buy the flat they rent, and
increasing the versatility of the housing policy.

     The government has formulated its plan to restructure the housing policy
along the following principles.

     It will:

     Gradually increase rents, to an extent exceeding the rate of inflation
but with an eye on the quality of the flats and the incomes of the families.

     Enforce similar progressivity in the interests charged on housing
credits, mindful of the appreciation of the flats.

     Enable the tenants in state-owned apartments to buy their flats, with
preferential conditions, and under a well-considered system. The local
self-governments will be free to spend the revenues from the sales on the
upkeep of the houses.

     Gradually transform social subsidies into additional incomes, which at
the same time will eliminate their role as mere reducers of rent.

     Agree on certain general rules with the local self-governments on the
sale and maintenance of flats.

     Consider at least part of the social housing subsidies to be the
responsibility of the central state bodies.

     Accelerate the privatization of the construction industry, building
material industry, and the building maintenance industry, as this is vital for
the operation of a genuine housing market. (The lack of building materials is
one of the roots of Hungary's current housing problems).

     Gradually eliminate non-welfare subsidies in order to be able to support
the most needy stratum according to their real income situation.

     The principles of the market will be gradually introduced in the sector
of tenement dwellings, through the creation of genuine owner-tenant relations,
and through the clear-cut separation of the rights and duties of the lessor
from those of the lessee.

Social security

     The citizens of Hungary are greatly concerned these days about the future
of the social security system. The government will review the whole system and
will submit to Parliament its draft bills on creating a new and more equitable
pension system, an adequate medical attendance system, and an efficient system
of health care institutions.

     The main guiding principles behind these draft bills are the need to
establis